HOME BANCORP, INC. (HBCP) Q1 2025 Earnings Summary

Executive Summary

• Q1 2025 delivered double‑digit growth with diluted EPS of $1.37 (+13% QoQ, +20% YoY) and NIM of 3.91% (+9 bps QoQ), driven by lower funding costs and steady asset yields .
• Loans grew to $2.75B (+$29.1M, +1.1% QoQ; ~4% annualized) and deposits rose to $2.83B (+$46.5M, +1.7% QoQ; ~7% annualized), supporting net interest income stability at $31.7M .
• Credit quality saw headline NPAs increase to $21.5M (0.62% of assets), largely from two relationships moving to nonaccrual; net charge‑offs were de minimis ($32k) and ACL remained 1.21% of loans, with management not expecting material principal losses on the flagged credits .
• Capital deployment accelerated: $0.27 dividend declared and a new 400,000‑share repurchase authorization approved; the company repurchased 173,497 shares in Q1 at $44.72 average price .
• Stock reaction catalysts: continued NIM expansion (even without additional rate cuts), disciplined deposit pricing, active buybacks near TBV, and stable credit outlook despite temporary NPA elevation .

What Went Well and What Went Wrong

• What Went Well

  • NIM expanded for the fourth consecutive quarter to 3.91% on a 15 bps decline in the cost of interest‑bearing deposits and stable asset yields; net interest income held at $31.7M .
  • Broad‑based franchise growth: loans +$29.1M with CRE gains in Houston/Northshore and multifamily gains in New Orleans/Northshore; deposits +$46.5M with non‑maturity growth and lower average deposit costs .
  • Management confidence and clear operating plan: “We remain confident in our outlook and think that the NIM and earnings will continue to expand in 2025. And even without any rate cuts.” (John Bordelon) .

• What Went Wrong

  • NPAs rose to $21.5M (0.62% of assets) from $15.6M due to two relationships moving to nonaccrual; allowance coverage stayed stable but headlines risk increased .
  • CDs remain an elevated portion of funding (27% of deposits), limiting the pace of cost reductions; management expects moderation rather than sharp declines in CD rates near‑term .
  • Loan yield flat at 6.43% despite higher‑rate originations, reflecting rate cuts’ impact on variable loans and nonaccrual transfers (approx. 2 bps headwind) .

Financial Results

Actual vs Consensus – Q1 2025

Values marked with * retrieved from S&P Global.

Segment breakdown (Loans, $USD Thousands, 3/31/2025)

Key KPIs and Balance Sheet

Drivers and context:

• Funding cost decline (interest‑bearing deposits 2.51% vs 2.66% in Q4) and increased average interest‑earning assets propelled the margin .
• Loan yields held at 6.43% (variable loans ~41%/59% fixed), with nonaccrual transfers offsetting some originations benefit; new loan contractual yields ~7.4% in Q1 per CFO .

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “We remain confident in our outlook and think that the NIM and earnings will continue to expand in 2025. And even without any rate cuts.” — John Bordelon, CEO .
• “We expect loans to grow at 4% to 6% annually and asset yields to continue to increase as new originations drive average loan yields higher…” — David Kirkley, CFO .
• On two new nonaccruals: “We feel that we have sufficient collateral on these loans, and we do not anticipate any material principal losses as we work to resolve them by the end of the year.” — David Kirkley .
• On CD pricing: “There will most likely remain a slightly elevated [CD rate]… cost of CDs will come down incrementally over the next quarter, but not very materially.” — John Bordelon .

Q&A Highlights

• Margin trajectory and rate sensitivity: Management expects stable to slightly increasing NIM even with a 25 bps cut, citing fixed‑rate loan protection and short‑duration CDs; March NIM ~3.95% .
• Credit detail on NPAs: One Mississippi condo development (pricing/absorption issue) and one Houston hotel under renovation; management seeks remedies and sees adequate collateral .
• Office exposure: Portfolio performing well without criticized assets; exposure concentrated in smaller markets and government‑occupied buildings .
• Deposit/LDR dynamics: Loan‑to‑deposit ratio likely stays tight absent a slowdown in loan demand; ongoing push for core deposit growth, especially in Houston .
• Capital returns: Opportunistic buybacks when shares trade near TBV; new 400k‑share authorization provides flexibility .

Estimates Context

• EPS and revenue materially beat consensus in Q1 2025: EPS $1.37 vs $1.14333*; revenue $35.36M* vs $30.90M*; beats driven by NIM expansion, deposit cost relief, and stronger noninterest income (loan sale gains) .
• With management guiding to continued NIM expansion and steady loan growth, Street EPS and revenue estimates may need upward revisions for 2025 to reflect improved spread dynamics and fee trends .

Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

• NIM tailwind looks durable: lower deposit costs (especially CDs), fixed‑rate loan mix shielding asset yields, and higher‑yield originations support earnings expansion even in a flat/down‑rate scenario .
• Credit noise should be manageable: NPAs rose from specific cases, but NCOs were minimal and management expects resolutions without material losses, with coverage ratios stable at 1.21% of loans .
• Capital returns accelerate: $0.27 dividend and 400k‑share buyback provide catalysts; buybacks near TBV are accretive and signal confidence in intrinsic value .
• Houston footprint expansion is a growth lever: recent branch building purchase and team additions should bolster CRE/C&I pipelines and core deposits .
• Funding discipline continues: short CD duration and measured pricing stance point to further, albeit moderating, cost relief; core deposits up and uninsured coverage strong .
• Efficiency improving: 60.35% efficiency ratio and stronger fee income (SBA loan sales) indicate better operating leverage into 2025 as expenses normalize .
• Near‑term positioning favors upward estimate revisions and positive stock catalysts from NIM, buybacks, and dividend growth; monitor NPAs resolution milestones and deposit competition intensity .

References: Q1 2025 press release/8‑K and exhibits ; Q1 2025 earnings call transcript ; Q4 2024 press release and call ; Q3 2024 call .